In Class Exercise # 4 Consumer Surplus
Multiple Choice
Identify the choice that best completes the statement or answers the question.
Table 7-3
The only four consumers in a market have the following willingness to pay for a good:
Buyer
Carlos
Quilana
Wilbur
Ming-la
____
Willingness to Pay
$15
$25
$35
$45
1. Refer to Table 7-3. If there is only one unit of the good and if the buyers bid against each other for the right
to purchase it, then the consumer surplus will be
a. $0 or slightly more.
b. $10 or slightly less.n
c. $30 or slightly more.
d. $45 or slightly less.
Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three
oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three
oranges can be supplied per day.
Alex
Barb
Carlos
First Orange
$2.00
$1.50
$0.75
Second Orange
$1.50
$1.00
$0.25
Third Orange
$0.75
$0.80
$0
____
2. Refer to Table 7-5. The market quantity of oranges demanded per day is exactly 5 if the price of an orange,
P, satisfies
a. $1.00 < P < $1.50.
b. $0.80 < P < $1.50.
c. $0.80 < P < $1.00.
d. $0.75 < P < $0.80.
____
3. Refer to Table 7-5. If the market price of an orange is $1.20, consumer surplus amounts to
a. $0.70.
b. $1.10.
c. $1.40.
d. $5.00.
____
4. Refer to Table 7-5. If the market price of an orange is $0.40,
a. 6 oranges are demanded per day, and total consumer surplus amounts to $4.45.
b. 6 oranges are demanded per day, and total consumer surplus amounts to $5.10.
c. 7 oranges are demanded per day, and total consumer surplus amounts to $5.35.
d. 7 oranges are demanded per day, and total consumer surplus amounts to $5.50.
____
5. Refer to Table 7-5. If the market price of an orange increases from $0.60 to $1.05, total consumer surplus
a. increases by $2.90.
b. decreases by $2.25.
c. decreases by $2.70.
d. decreases by $3.85.
Figure 7-4
Price
170
160
Supply
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
Demand
2
4 5 6
8
10
12
14
16
18
20
22
25
24 26
28
Quantity
____
6. Refer to Figure 7-4. At the equilibrium price, consumer surplus is
a. $200.
b. $300.
c. $500.
d. $600.
____
7. Refer to Figure 7-4. If the government imposes a price floor of $120 in this market, then consumer surplus
will decrease by
a. $75.
b. $125.
c. $225.
d. $300.
In Class Exercise # 4 Consumer Surplus
Answer Section
MULTIPLE CHOICE
1. ANS:
NAT:
MSC:
2. ANS:
NAT:
MSC:
3. ANS:
NAT:
MSC:
4. ANS:
NAT:
MSC:
5. ANS:
NAT:
MSC:
6. ANS:
NAT:
MSC:
7. ANS:
NAT:
MSC:
B
Analytic
Applicative
D
Analytic
Analytical
C
Analytic
Analytical
D
Analytic
Analytical
B
Analytic
Applicative
B
Analytic
Applicative
C
Analytic
Applicative
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Consumer surplus
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Market demand
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Consumer surplus
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Market demand | Consumer surplus
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Consumer surplus
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Consumer surplus
PTS: 1
DIF: 3
LOC: Supply and demand
REF: 7-1
TOP: Consumer surplus